The struggle over return-to-work policies is leaning heavily in employers’ favor as corporate layoffs give managers the advantage.
- After years of employers struggling with employee retention, hiring is getting easier in some industries, giving managers more power to order employees back to the office.
- Pay increases are decreasing, and some companies are cutting back on staff to reduce overall spending, The Wall Street Journal reports.
- Layoffs were mostly confined to the tech industry, but now they are beginning to spread to companies like PayPal and toy maker Hasbro.
- With the threat of layoffs, employees who were previously unwilling to come to the office in person are returning.
- Hiring managers also note that there is less pressure to hire quickly.
Why it’s news
Shortly after the pandemic, companies struggled to find enough employees to fill open roles, giving employees more negotiating power regarding remote work options and pay increases. As more layoff announcements worry workers, employers are beginning to gain the upper hand in negotiations.
Despite worker concerns, the job market remains tight. Unemployment reached 3.5% in December, and hourly wages were 4.6% higher than the year before. The Labor Department reported nearly 11 million jobs were unfilled. Compared to the year before, layoffs in December increased but were still lower than before the pandemic.
Last month’s reports showed a continuing tight labor market, but there were some signs of cooling. Hiring was the slowest in two years. Head-count gains and yearly wage increases lessened, The Wall Street Journal reports.
As interest rate hikes from the Federal Reserve continue, many CEOs anticipate a recession this year. These concerns are prompting company leaders to cut back on unnecessary spending, which could mean slowing hiring or letting low-performing employees go.
January is typically when the most layoffs occur, even when the economy is doing well. Layoffs in most industries are still below pre-pandemic levels—except in financial services, information, and transportation and warehousing sectors.
Backing up a bit
Big Tech is still suffering as giants Microsoft and Amazon announce layoffs. At the beginning of the year, Amazon announced its largest-ever round of company layoffs. Around 18,000 workers in the global company will be released.
Amazon is dealing with slowing sales following rapid growth during the pandemic. The online retailer expanded rapidly during the pandemic but now seems to be struggling to maintain the massive infrastructure.
Fellow tech company Microsoft announced that it would lay off approximately 10,000 employees. Microsoft will be reducing staff in both the human resources and engineering departments.